Budget 2015

HMRC closes in on IR35 abusers

As the post-Summer Budget dust starts to settle, there is a hotly debated topic still keeping contractors awake at night. Last week I started to look at the proposed changes to dividend tax, which form part of a series of wider reforms to the Intermediaries Legislation, commonly known as IR35.

The publication of HMRC’s IR35 discussion document in July has triggered a growing sense of unease amongst the contractor community. The big concern is that these latest attempts to achieve clarity will only serve to move the onus of declaring a worker’s status from the worker themselves, to the reluctant client.

The story so far

In order to get on board with the so-called “Rationale for Change”, it is important to first understand the current situation…

Under the current ways of trading with a client, self-employed workers have been able to use employment intermediaries such as Umbrella companies, employment businesses and Personal Service Companies (PSCs) as a way to reduce their tax and National Insurance payments.

As a result, people pay different levels of tax depending on whether they are employees, self-employed, or work through their own Limited Company.

An example of this is a contractor being able to claim tax relief for travel and subsistence costs to and from their usual place of work, whereas an employed worker doing exactly the same job would have to grin and bear it with no tax reliew for themselves. It is this disparity that the Chancellor, George Osborne, wants to even out.

Who is at risk?

Most contractors are operating fairly and squarely through these employment intermediaries and have legitimate and justifiable reasons for working through a Limited Company, such a the protection of limited liability, greater flexibility and long-term planning options. However, some are taking unfair advantage of the system and it is these “abusers” that the Chancellor has set his sights on catching.

In my view, anything that helps police the industry more effectively and “level the playing field” so it is fair to all, is a good thing. By tightening the noose on IR35 abusers, the Chancellor is paving the way for legitimate PSCs to get on with what they do best and being recognised for the valuable contribution they make to the UK’s flexible workforce.

Understandably the fear is that, rather like trawling the ocean to catch a few naughty fish hiding in the shadows, many compliant businesses will be caught up in the new measures designed to better fill the Treasury’s coffers. The other contentious matter is introducing the concept of “fairness” to a moral and ethical debate. How can ‘fair’ be anything other than subjective?

As you can see, the situation is not as clear cut as HMRC would like us to think. The Treasury’s promise to the Chancellor that the IR35 reforms could help raise an additional £430 million is, in the view of many commentators, unrealistic.

There may be trouble ahead

A key flaw in the discussion document’s suggestion is the proposal of putting the responsibility of assessing a contractor’s IR35 status onto the engager. This is likely to cause a serious headache for UK employers. Why does HMRC think engagers will be any more accurate in doing this than the worker, unless it is accompanied by transfer of debt provisions?

To me, this is where the reforms start to unravel. Is the tax man seriously expecting people to put up their hands and declare, “I am Spartacus!”?

The current guidance for identifying “supervision, direction or control” [see ESM2029 for examples] to help assess the worker’s tax status is, in itself, entirely based on hypothetical examples and open to misinterpretation in the real world. This is a subject I will be exploring in more detail on the Intouch blog over the coming weeks.

The constant challenge for HMRC is deciding who should, or should not, be either side of the IR35 dividing line. In an ideal world, HMRC would like to make every PSC worker or self-employed contractor fit in a neat little box and put the onus on the engager to determine where they slot in on the compliancy scale.

After reading the discussion document, you would be forgiven for thinking that every individual case is easy to assess. The case study examples are so clear cut and unrealistic it’s almost caricature.

For as we know, the reality of whether IR35 applies or not is anything but black and white. In fact, there are so many shades of grey in between that there are almost unlimited ways to argue the situation.

This is why HMRC has struggled to enforce legislation in the past. So although its good intentions are to be supported, viewing the current landscape through an oversimplified lens and merely playing around with subjective rules is unlikely to improve effectiveness of the current legislation.

To make a real difference, HMRC needs a system that sorts the wheat from the chaff, and can identify abusers based on something other than gut feel. They should not be scared of rapid expansion in a modern method of working just because the Treasury would be better off if we were all permanent employees.

I have no doubt HMRC recognises and accepts the reality of this deeply complex issue and wants to develop solutions that work within the grey areas as well as the black and white ones. The discussion document asks for help and, as stakeholders, we must respond responsibly and impartially. It is still better for Spartacus to identify himself rather than letting the soldiers of HMRC do it.

There’s no doubt the industry faces change ahead. But rather than hiding away, now is the time to fasten your seatbelt and talk to your accountant about what changes you might need to put in place to reinforce best practice standards and compliancy.

If you haven’t already, I recommend anyone who suspects they might be affected by the changes should read HMRC’s Intermediaries Legislation (IR35): discussion document or speak to your trade body and get involved in the conversation while you still have a chance to make a difference.

At Intouch our priority over the weeks and months leading up to next April is to advise and support our clients making the correct decision on their IR35 status.

If you are concerned about the proposed IR35 reforms or your compliancy position, give our team of expert contractor accountants a call on 01202 375491 and let Intouch make this complex issue a simple one to resolve.

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

2015 Budget aftermath: A look at what the dividend tax change means for contractors

Across the country, contractors are still reeling after the changes announced in the Summer 2015 Budget (see our full Summer Budget review here). In particular, the community has been awash with speculation and concern regarding the Government’s pledge to introduce a new taxation system for dividends taken from companies.

Under the current regime, there is a 10% tax rate for dividends but this is cancelled out by a 10% tax credit, meaning basic rate taxpayers receive dividend income tax-free. According to our man with a plan, Chancellor George Osborne, this system is “Arcane” and “Complex.”

The result of this thinking has been an overhaul of the current dividend tax system, with a new – and supposedly simpler – £5,000 tax-free dividend coming into play from April 2016. So far, so good you might say. However, with the introduction of this new limit comes the creation of three new dividend tax bands, which will apply to all dividend income in excess of £5,000 per year, as follows:

7.5% (basic rate)

32.5% (higher rate)

38.1% (additional rate)

So what can you do about it? Well the first step is to make sure you understand the changes and what they mean for you and your business model. Let’s take a look.

Does it affect you?

The majority (around 85%) of UK taxpayers will, in fact, be safe from the changes thanks to the £5,000 tax free allowance. At normal rates of dividend yields, you would need to own £140,000 worth of shares before you hit that £5,000 sweet spot and the new dividend tax kicks in.

I predict the most affected community will be the middle income entrepreneurs. This will include freelancers and contractors trading through their own Limited Company (see our post on the advantages of contracting through a Limited Company), as well as any family owned businesses that have previously used dividends to reward shareholders, who may or may not also be employees.

The Government appears set on removing the incentive for incorporations that are motivated primarily to allow freelancers and contractors to save National Insurance by setting up as their own boss. It seems an interesting coincidence that the new 7.5% dividends tax works out at the same amount (roughly) as a basic rate taxpayer would save on National Insurance using dividends.

But this is a short-sighted strategy, for it is unlikely to deter people who should have been operating as a Personal Service Company (PSC) in the first place. Instead, it will add an extra tax burden to small and medium sized entities, which create jobs and wealth for UK plc.

I expect it will deter tax motivated incorporations for the vulnerable and lower paid contractors. However, is the likely additional ‘tax take’ from those individuals really worth the political criticism from attacking entrepreneurs?

“How can the Government get away with it?” you may ask. Well, the Chancellor has used smoke and mirrors to distract the business community with talk of a longer-term aim to allow further reductions in the rate of corporation tax. I’m afraid I don’t buy it. To me, this feels like a tax raid upon small and medium sized enterprises (SMEs), micro and nano businesses set up by entrepreneurs in the UK.

How will the changes affect your income?

For contractors and freelancers who earn up to the basic rate ceiling and take a salary of £8,000 and £31,000 dividends, their tax bill will rise by around £2,000.

While this is not an insignificant sum to be taken lightly, the reality could be that the impact is still less damaging than the sacrifice of other perks if a contractor returned to PAYE status. To me, the advantages of contracting – both in the immediate and long term, such as planning for retirement and pension funding – far outweigh the initial financial hit of this dividend tax change.

So as you can see, this is not just an issue for the contracting elite. It affects any business where the owners are also employees. For this reason, I believe this latest raft of changes is an attack on all small family and close company businesses, not just one man band contractors.

If you are unsure about how the changes will affect your income, it would be wise to speak to your accountant sooner rather than later.

Remember the benefits of going solo

Contractors considering jumping ship and heading back into permanent employment would be well-advised not to make a hasty decision they may later regret.

At times like this, it can be tempting to start reviewing your business structure or how your company directors are paid. But my advice is this; Keep calm, and talk to an accountant.

In the same way share valuations can go up and down, taxes tend to ebb and flow with the political agenda. It is therefore crucial not to panic and make knee jerk reactions without first doing the sums and remembering the reasons why you went solo in the first place.

There are still benefits to be had by keeping your business model simple, remaining as your own boss and weathering the changes. It might turn out to be just a storm in a teacup.

What should you do next?

If you don’t already have a contractor accountant, now would be a good time to appoint one. I assume most advisers will be very busy in the run up to 5 April 2016, working out if large dividends should be paid before the rules change, along with which family members should be added to the share register.

The contractor landscape can be daunting enough as it is, so why not give us a call on 01202 375491 and let our team of expert contractor accountants guide you through the choppy waters left in the wake of this Summer’s budget?

In the meantime, watch out for more discussion on this issue over the coming weeks on the Intouch Accounting blog. To subscribe, simply fill in your details below so you can receive the latest industry advice, comment and analysis direct to your inbox.

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

July 2015 Budget

Yesterday Chancellor George Osborne presented his first Tory Budget to the House of Commons.

He optimistically presented it as a “Budget for working people” that creates a “sensible path for the benefit of the whole of the United Kingdom”. He reported that the British economy is fundamentally stronger today than it was five years ago and that it is growing faster than any other major advanced economy. Osborne is confident his plans will boldly back the aspirations of working people and suit a country with big ambitions.

We’ve unpicked exactly what this means for contractors – it’s immediately clear how some of the pledges will impact this community. With others, the coming months will reveal more and we’ll be keeping a keen eye on the proposed changes and what they mean for you. We’re involved in the conversations right at the top level and will continue to actively and aggressively champion contractors’ cause. We’re here to speak up on your behalf against the unfair and inappropriate suggestions put forward by government and remain an active part of the consultation discussions.

What is clear from yesterday is that changes are afoot for the contracting community and while Umbrella companies and workers will suffer the most (and soon), Limited Company contractors continue to have more opportunities to get the most out of contracting. And those who engage the services of an expert contractor accountant will certainly benefit more than those who rely on accountancy software alone to get them through. After all, keeping tidy records is one thing; having the know-how to make sure you’re getting the most while remaining compliant is quite another.

We’ve picked out the Budget announcements that contractors will be most interested in:

The challenges

In the March Budget no mention was made of IR35. Three months on Osborne clearly stated that consultations will take place soon to deal with the increasing abuse of the rules around disguised employment when working through a personal service company. On the face of it, this shouldn’t affect most contractors operating legitimately as long as you are able to demonstrate you aren’t operating as a disguised employee. But it will be more important than ever that you get every contract you undertake assessed for the level of risk you face under IR35. We’ll be part of the discussions and have already been invited by HMRC to take part in the consultation. We’ll be there to represent the interests of contractors.

The lifetime of the Office of Tax Simplification (OTS) has been extended. Earlier in the year it wasn’t clear if it would survive beyond the election but now its role has been extended and it will be looking at small company tax matters. This will include personal service companies.

The permanent non-dom tax status will be abolished and by April 2017 those who previously positioned themselves as such will pay the same taxes as everyone else.

Dividend tax credits will be replaced by a new £5,000 tax-free dividend allowance for all taxpayers from April 2016. After this amount, tax rates on dividend income will increase incrementally. Put simply, those who have a modest income (i.e £5,000 or less) from dividends will see either a tax cut or no change in the amount they owe; those with significant dividend income will pay more tax. It’s likely many contractors will need to reconsider the split between what they take as salary and what they take as dividends.

A consultation document has been issued following the March Budget’s limitations to Umbrella workers’ travel and subsistence (T&S) claims. Following our earlier involvement in the debate, Intouch has been invited to further round table discussions on T&S and we will be making sure that the contractor voice on this subject is heard loud and clear!

Employment Allowance has been removed for companies where the director is the sole employee. At this stage it is unclear if this will apply for companies which have a spouse second employee and we await further clarity on this.

The National Living Wage will increase to £7.20 an hour for over 25s in April 2016. This will rise to over £9 an hour by 2020. Any change may well affect spouse wages that are paid.

Tax relief for buy to let landlords will be restricted to 20% for all individuals by April 2020. In addition ‘wear and tear allowance’ will be replaced by a system that only applies if the landlord actually replaces furnishings.

The additional pledge by Osborne to increase HMRC resources to make sure people pay the tax they owe may set alarm bells ringing for some but knowing what you can do and remaining compliant doesn’t need to be a headache for you if you have the services of a reputable contractor accountant at your fingertips.

The good:

Forecast for jobs growth, created by businesses with the confidence to invest, to grow and to hire. This could be the boost contractors want to hear as businesses launch projects they may have been holding off on while they awaited Budget news.

The tax free Personal Allowance will be increased from £10,600 in 2015-16 to £11,000 in April 2016. The longer-term plan is to increase this to £12,500 by 2020 but we hope to see this come into effect sooner.

The 40% higher rate income tax threshold will increase from £42,385 in 2015-16 to £43,000 in 2016-17.

Corporation Tax will be cut to 19% in 2017 and 18% in 2020.

Inheritance tax is set to change and from 2017 the Government will phase in a new £175,000 allowance for your home when you leave it to your children or grandchildren. This is in addition to the existing £325,000 threshold which will be fixed until the end of 2020-21.

– Both allowances can be transferred to your spouse or partner.

– Those who choose to downsize will not lose any of the allowance from the property they used to own.

– In some cases you will be able to pass up to £1 million on to your children free of inheritance tax.

– Subject to relief will be tapered away for estates worth more than £2 million.

Free childcare for working families with three and four year olds will double from September 2017, from 15 to 30 hours. This should have a significant impact for all contractors with children, in particular single parent families and mums planning to return to work. In addition the childcare voucher scheme continues until early 2017 when the new tax free childcare is introduced.

Tips to help you manage outcomes from today’s Budget:

The ongoing T&S consultation suggests that all PSC contractors look at their working practices and contracts to determine how HMRC’s proposed plans might affect them. Do this before the final legislation comes into play in April 2016 if you want to protect your expense claims for travel and subsistence.

If you are working through an Umbrella company then now is the time to think about the future. With most of your expense claims becoming ignored or taxable and the threat to your mileage claims following the T&S consultation you may find your income dropping off quickly after April 2016.

If you’re not already using a specialist contractor accountant, consider engaging one sooner rather than later. They are best placed to understand the implications of the Budget and the options available to you. If they deal with the sector every day they should know the pitfalls and opportunities, so take advantage of their experience and expertise.

The Budget has made it clear that scrutiny on IR35 has shot up Government’s agenda so it makes sense to opt for an accountant who can support you with IR35, including assessing the risks.

Look at the service you are receiving – if it’s software-heavy but light on personal advice you are likely to be missing out on opportunities. Consider if you are making the most out of contracting and fully mitigating the risks. And most importantly, that you are only paying the right amount of tax!

Change accountant – if you’re not happy with the service you are receiving from your current supplier, don’t put up with second best. You need to be able to rely on your accountant and there’s no room for complacency.

If you’ve been trying to manage your accounts by yourself or use the services of a software company without the personal service, it’s wise to engage a reputable accountant who can help you navigate through the changes. If you already have an accountant but don’t think you’re getting the service you deserve, talk to us about switching to Intouch. With the right advice you can make the most and mitigate the challenges.

The qualified experts at Intouch work with contractors every day and keep on top of changes that will affect you. We charged a fixed all inclusive fee of £92 + VAT a month and this covers everything you need to run your company smoothly and ensure you remain compliant.

If you are already an Intouch client and have questions about what the Budget means for you, please contact your personal accountant directly.

If you are not an Intouch client, contact us today to talk about how we can help you get the most from contracting.

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

July’s Budget – what’s in it for contractors?

With tomorrow’s Budget just hours away, what’s in the red briefcase for UK contractors? It’s George Osborne’s first solo Budget, so it’s only natural to wonder what effect both the Budget and the recent general election will have on the UK’s contractor landscape.

An impending UK Budget is always an uncertain time, especially when the self-employed are likely to be affected. Whilst all of us dream of policies that will make our lives easier, some contractors simply want a fairer way of working, helping them to reach their contracting potential. Here’s a few things we’d like to see tomorrow that would help the UK contractor market:

Clarity surrounding the reimbursement of business expenses post March 2015

Clear decisions on the proposed changes to travel and subsistence rules

Clear decisions and commitment to the simplification of the tax system

Clarity about Government’s long-term intentions regarding IR35

Greater support for small businesses, especially contractor companies, to get the right start

Exemption for small companies from tax reporting so small businesses don’t suffer under big business rules

Quarterly RTI submission, to match existing quarterly payments – surely it makes sense to bring the RTI reporting regime in line with the payment regime

Greater clarity on timescales for digital tax returns

More childcare support by increasing the threshold for child care vouchers. As child care tax relief has been delayed, it makes sense to use another incentive to make it easier for people to get back to work

Back to work schemes that encourage all people to get back to different types of work, not just permanent employment. The schemes need to encourage entry to a flexible workforce, including contracting

Increase personal allowance to £12,000 – why delay?

Increase the threshold after which a formal members’ liquidation is required, from £25,000 to £50,000 to make it easier to close a company where no other creditors are involved

HMRC should adopt a fairer basis for penalties and interest, as proposed in their consultation document.

Whilst the above in most cases may remain fantasy, we are hopeful that this Government will be keeping the self-employed’s best interests at heart. To understand exactly who will be fighting the corner for UK contractors we’ve taken a look at some of the MPs, and what their positions are:

Ambassador for self-employment: @davidmorris has been reappointed to provide single focus for the self-employed. With his presence within parliament, the self-employed are empowered with a voice for change and support. David regularly tweets about how he is planning to challenge IR35, with talks last week of the Secretary of State for Business bringing it to the top of parliament’s attention.

Secretary of State for Business: @sajidjavid has been appointed to engage and demonstrate the value of the UK’s self-employed in today’s workplace. Previously Mr Javid has demonstrated a strong emphasis on late payments to contractors, clearly demonstrating that issues which affect contractors are close to his heart.

The Minister for Small Business, Industry and Enterprise: @anna_soubry is tasked with ensuring there’s growth and competitiveness with the UK’s small businesses market. A newly created position within parliament, only demonstrating further the commitment the Tories have towards supporting Limited Company contractors.

So whilst contractors can hope to see positive pledges being made in tomorrow’s Budget, the reality is we don’t quite know. Be sure to look out for our blog for our Budget reaction and whether it’s a positive step for the UK’s contractors.

What would you like to see in tomorrow’s Budget? Let us know what’s on your wish list.

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Will the Red Box budget for contractors and freelancers?

The Budget is this Wednesday and in true pre-Election fashion it is unlikely it will be full of radical announcements.

I predict it will consist of Osborne telling us what he thinks we need to hear and not what he really intends to do, if he still has his job in the second week of May. Could we be looking at two Budgets in one year?

The Conservatives billed themselves as being ‘the party of small business’ but, in reality, very few independent professionals will have felt any benefits from policy changes. In fact, the Government could be criticised for not delivering enough to empower freelancers and contractors. In the final pre-Election Budget it is uncertain, but also unlikely, that contractors will see significant changes in Osborne’s statement.

A number of tax changes have been announced already and have been under discussion. To the extent that they are not contentious, or at least acceptable to the other major political parties, they will be included in the Finance Bill and will be enacted before the end of this month.

The main, eye catching, announcements are likely to be changes which the Chancellor would like to make in the next Parliament if the Conservatives are in power, or are a member of a Coalition, in that Parliament; as there will then be less than six weeks of campaigning before the Election on Thursday 7 May.

The tone, and content, of the Budget is going to be highly political and will have a strong influence on the campaign not least because the Chancellor is the key strategist of the Conservative party. We know that contractors and freelancers are the lifeblood of the UK economy and they have an important role in rebuilding the economy. Inevitably there won’t be many people whom the Budget doesn’t affect one way or another so we’ve picked out some of our predictions that will be of particular interest to freelancers and contractors.

What is likely to come up in the Budget 2015 specifically affecting contractors and freelancers?

More measures to tackle tax evasion and tax avoidance

We can definitely expect that more tough measures will be announced, for next Parliament, to provide criminal sanctions for tax evaders and their advisors, whatever their role. Initiatives such as a ‘diverted profits tax’ targeting multinational companies who have been judged to have shifted profits overseas to avoid tax are expected to be implemented.

Support for key industries

It is expected that Osborne will unveil measures to support the North Sea oil and gas industry which will be welcome to many contractors who work in this industry, from engineers to IT specialists and finance professionals. It is hoped that a boost to British manufacturing will help rebalance the economy and protect the livelihood of contractors already in the industry while creating demand for their skills.

Tax simplification

The Office of Tax Simplification (OTS) has suggested many changes in a variety of areas that have previously been adopted but it has suffered from a lack of resources and is due to wind up at the end of this Parliament. The Chancellor may decide to put the OTS on a more permanent footing and properly resourced if the Conservatives win the election. If so we can expect more changes to arise in the coming Parliament to simplify taxation especially for small businesses and individuals.

Travel and subsistence claims for Umbrella workers

This is still high on the political agenda but the highly anticipated clampdown on travel and subsistence (T&S) expenses may not happen in this Budget. The concern was originally raised by MPs accusing Umbrellas of exploiting workers but FCSA disagree and have plead to MPs that imposing these proposals would threaten the £2.8bn of income tax and National Insurance Contributions generated by Umbrella service providers HMRC have already stated that “any proposed measure to address this misuse will not come into effect until 2016 at the earliest”.

We can expect a restriction rather than a removal of tax relief for workers, with a curtailment of T&S expenses more likely from April 2016. The Chancellor’s statement last Wednesday, following the closure of HMRC’s consultation, will “inform the government’s decisions at Budget ‘15 on how best to address this avoidance.”

Personal Allowances and income tax thresholds

The Allowance for the average person went up from £6,475 to £10,000 over this Parliament, and the Autumn Statement announced an increase to £10,600 from 6 April 2015. A further increase is possible, perhaps by an additional £200, but unlikely, although there are hints that the Chancellor may announce future target increases.

It’s possible that the Chancellor may extend the basic rate threshold so that, allowing for allowances that the basic rate band moves closer towards an intended goal, announced in the Autumn Statement, of £50,000.

Inheritance Tax

Inheritance Tax is currently levied at 40% on estates worth £325,000 and above. There are hints of a return to the promise of increasing the Inheritance Tax nil rate band to £1 million and clarifying if the limit is per person or per married couple or civil partnership. It is thought Osborne will announce plans which involves the person inheriting rather than the deceased’s estate, being taxed. This would be popular among high earning professionals including contractors who may currently view Inheritance Tax as an inhibitor to aspiration and ambition.

Entrepreneurs’ Relief

The cost of Entrepreneurs’ Relief (ER) in 2013/14 is £2.9bn: three times higher than HMRC’s estimated cost. Unexpected changes were announced in the Autumn Statement and it is possible that further announcements on ways to limit ER will arise.

Capital allowances

The Annual Investment Allowance is currently £500,000 but is due to fall back to just £25,000 on 1 January 2016. It is possible that the Chancellor may promise to extend the £500,000 limit if the government is re-elected.

Research and development tax credits

Changes to the system for claiming research and development R&D tax credits were announced in the Autumn Statement introducing a new advance assurance service for small companies from the autumn. Further assistance may be announced to help small companies undertaking R&D perhaps in simplifying the definitions of applicable costs.

Pensions and pensioners

The Prime Minister has announced that he wants to protect pensioner benefits. But there may be announcements about tax relief for pension contributions and limiting the contributions possible or the scope to only basic rate tax relief.

Watch this space

It is hoped that the 2015 Budget will finally address the realities faced by the freelancer and contractor community.The Federation for Small Business has been calling for policies to help small businesses grow, through tax reforms and sensitive changes to Minimum Wage rules. Of course Osborne needs to leave some rabbits in the hat for Wednesday and it may be that initiatives such as a further reduction to Corporation Tax (which would be welcomed by Limited Company contractors) are saved for the Conservatives’ Election manifesto.

Whatever happens in the 2015 Budget, we’ll publish our views on what it means for contractors after the announcement. Make sure you follow us on social media for the latest updates:

What do you hope to see in this year’s Budget?

While we wait for the Budget, are you ready for the 2014/15 tax yearend? Download our new guide and get the most from being a contractor.

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.